Mr. Belmonte

Franchising

Are You A Franchising Friend or Foe?

By Steven Belmonte, CEO, Vimana Franchise Systems LLC

This got me to thinking. Franchising represents about 60 percent of the hospitality industry, contributing billions of dollars in annual U.S. revenues. So why is it that we as an industry do not celebrate a national or global "Hotel Franchise Appreciation Day?"

Could the answer be that hotel franchising simply isn't appreciated? With franchise fees what they are today, I have to believe that the franchisors appreciate it. Travelers certainly appreciate it - especially those reaping the rewards offered by growing brand/franchise-loyalty programs. Even national franchisee associations appreciate hotel franchising.

In fact, the American Association of Franchisees and Dealers recently honored my long-time industry friend Mike Leven, and the franchise system he founded, US Franchise Systems Inc. (USFS), with AAFD's prestigious "Total Quality Franchising Lifetime Achievement Award." Likewise, USFS is being recognized as AAFD's second twice-honored "Franchisor of the Year."

Kudos to Leven for Lifetime Achievement

In an article that appeared last month on the American Association of Franchisees & Dealers Web site (AAFD), AAFD Chairman Robert Purvin said the recognition of Mile Leven by the association was long overdue.

"Mike has truly set himself apart as a distinguished citizen within the hospitality industry as well as the franchising community," Purvin said. "Equally important from the perspective of the AAFD, Mike has built his reputation on a dedication to fairness and respect for his franchisee constituents; a man who has set and embodied the very standards of conduct that the AAFD exists to uphold."

Knowing Mike for as long as I have, it's easy to say that he has placed great value on the franchise relationship and has committed his career to the practice of fair franchising. His vision for USFS was to create a company that would be a leading example, both ethically and financially, in the business of franchising. I personally believe that he has been successful in his endeavors, and feel he deserves industry wide kudos for his efforts and success. Congratulations Mike and USFS!

Making Franchising Work for Everyone

While Mike Leven and countless other executives in hospitality, such as Roger Bloss, Alan Tallis and Kevin Lewis, make franchising look easy- it isn't-especially for the franchisee who is new to being an owner and new to the industry. Like any relationship, the best intentions at the outset don't always result in compatibility.

As both a franchisor (formerly serving as President and CEO of Ramada Hotels, owned by Cendant, one of the largest hotel franchise companies in the world) and as a franchisee, I certainly understand and appreciate the challenges that come with wearing both hats. As a franchisor I can honestly say that I have felt "underappreciated." And, as a former franchisee and also as a mediator of franchisee/franchisor disputes, it's also easy to understand why an owner wants to run, not walk away from certain franchise agreement.

But there is a happy medium, and as someone who rather looks at a glass as being half-full rather than half-empty, there probably are more examples of positive franchisor/franchisee relationships than there are negative ones.

But the blame for souring relations can't be cast to one party or the other. Instead, the blame typically rests within the franchise agreement.

Whether you're a novice or an experienced hotelier, it's important to do your homework before entering into a franchise agreement. Make sure that the franchise company: (1) has successfully operated the brand for at least five to 10 years at multiple locations; (2) is not plagued by litigation or complaints from disgruntled franchise owners; and (3) has a balanced, fair franchise contract.

But how do know if a franchise contract is balanced and fair, especially if you are new to hospitality specifically and franchising in general? It's simple. Hire an experienced, impartial third party who understands both hospitality and franchising to assist in the negotiations of the agreement.

Cutting Through Legaleeze, Legal Fees

The trouble with franchise agreements is that these contracts are often incredibly complex and virtually filled with legal land mines - which is why, up until the past year or so, the typical franchisee had to retain legal counsel to negotiate a fair contract up front or an equitable termination agreement on the back end. And even with a lawyer, there's no guarantee you'll get the best possible agreement-typically, lawyers know the law, not the hotel business. Nor do they know the individual culture that exists at each of the franchise companies.

The solution is to find a company that offers owners and operators franchise-negotiation services at a fraction of the cost-and, frankly, at a fraction of the time-that it normally takes to hire a lawyer to do the job. This expert - especially one who knows hospitality --can negotiate entrance or exit agreements far faster and less expensively than an attorney.

In addition, a negotiations specialist can wrap up the typical project in as little as two weeks-the time it usually takes lawyers just to get you on their calendar. Cost-wise, there's also no comparison.

With true negotiating power in your hands, a franchisee is guaranteed to enter into a franchise relationship that is a win-win. If you're a person who simply likes to find contention with any situation and doesn't like to play by the rules, then perhaps franchising isn't for you.

A true franchise friend will work to celebrate franchising - both at the national association level and perhaps one day, on a dedicated day for hospitality. A franchise foe will do everything within his or her power to tear down the walls of communication and trust that we as an industry have worked so hard to build up over the years.

Friend or Foe? The choice is yours. The result, however, affects us all.

Vimana Franchise Systems LLC is a hotel franchise company owned by CEO Steve Belmonte, President Neal Jackson and Vice President Cory Jackson Jr. In May 2011, Vimana Franchise Systems launched the Centerstone brand as a three-segment franchise designed to create a fair and cost effective model for the hospitality industry. In November 2011, Key West Inns was re-launched under the Vimana Franchise ownership umbrella as a fun and uniquely themed leisure brand. For more information on Vimana Franchise Systems LLC, contact Steve Belmonte at (407) 654-5540 steve@vimanafs.com. Visit Vimana Franchise Systems online at www.VimanaFS.com. Visit Centerstone online at www.centerstonehotels.com, on Twitter at @Centerstonehtls, or on Facebook at www.facebook.com/Centerstonehotels. Visit Key West Inns online at www.staykeywesthotels.com, on Twitter at @StayKeyWest, or on Facebook at http://www.facebook.com/staykeywest. Mr. Belmonte can be contacted at 407-654-5540 or steve@centerstonehotels.com Extended Bio...

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